It is news to no one that these are times of rapid change in retail. The digital transformation that is being driven by technological advances, consumer expectations and the competitive pressure exerted by Amazon and digitally native upstarts, is not confined to one vertical or one region of the world.
Daniel Lucht, research director of London-based ResearchFarm took some time out at IRCE this week to talk to us about the retail landscape in the UK. He said retailers are facing disruption in the form of uncertainty around Brexit, from employment shifts as artificial intelligence continues to offer efficiencies and from the long-running migration of retail to online.
The effects of rapidly increasing online sales are hardly confined to the UK, and while the shift is disruptive, it also represents an opportunity. In the video interview below, Lucht explains why taking advantage of digital sales channels can be more challenging for some retailers, such as legacy brick-and-mortar players, compared to others.
Department stores have had a particularly difficult time in the age of Amazon and the litany of bankruptcy has continued both in the UK and the U.S. Some have referred to the downsizing as a retail apocalypse and while the narrative is dramatic, the change is more complicated. As Sucharita Kodali pointed out at NRF’s Big Show earlier this year, more retail companies opened stores last year than closed them.
Legacy brick-and-mortar stores are rethinking their businesses
Legacy brick-and-mortar stores need to rethink how they do business and many are. Long-lived brands have an opportunity to provide an experience in-store, such as fashion events, cooking demonstrations, social mixers — all in a store that a significant number of consumers have grown to trust over the years.
Digital natives, who started businesses in the cloud are now opening physical stores, although they are not traditional retail outlets. Instead, they tend to be more like showrooms and places where consumers can get advice about products and purchases.
Traditional brick-and-mortar stores have an opportunity to use their stores as a distribution network. Each store provides a node to offer buy-online-pick-up-in-store, with the potential to gain additional sales when consumers come into the store for their digital purchases. The existing stores can also act as mini-warehouses, supporting ship-from-store initiatives that help meet consumers’ expectations for rapid delivery.
Disruption always produces winners and losers
But they call it disruption for a reason. In any disruption there are winners and there are losers. And often it takes time to sort out just who is which. No doubt Lucht is right about the UK having a surplus of retail in general. The same is true in the United States. The market will continue to correct, which will mean some continuing pain.
But it will also no doubt result in some retail innovations that we’ve yet to even imagine.